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To: Don Green who wrote (86183)	4/28/2003 10:53:03 AM
From: Don Green	Read Replies (1) \| Respond to of 93625

Japan's top chip suppliers kick up capital spending Jack Robertson EBN (04/28/2003 10:00 AM EST) After a two-year hiatus, Japan's largest chipmakers are again hiking their capital investment budgets. In fact, as its semiconductor suppliers try to regain their footing and adopt new long-range business strategies, Japan is among the few markets expected to raise spending for new plants and equipment. Morgan Stanley Research, San Francisco, projects that Japanese chip capital expenditures will grow 39% this year, to $6.07 billion, while spending in North America, Taiwan, and Asia-Pacific declines and remains flat in Europe. Korea is the only other country projected to raise its capital outlay in 2003. Morgan Stanley analyst Steve Pelayo said chipmakers in Japan are focusing the bulk of their capex on the production of ICs for consumer electronic products, a market that is still growing and where the country has a strong postion. Sony Corp. and Toshiba Corp. last week paced the capex resurgence by separately announcing plans to build 300mm-wafer fabs with 65nm process geometries. Sony Computer Entertainment Inc. will invest about $1.7 billion over the next three years to build a 300mm fab in Isahaya City, Japan, to make its next-generation game processor, code-named Cell. Sony has been developing Cell technology with IBM Corp. and Toshiba since 2001. The fab is also slated to make other SoC devices for future Sony electronic game consoles. Toshiba said it will invest $1.7 billion over four years to build a 300mm-wafer fab in Oita, Japan. A spokesman said Sony is expected to invest in the Oita fab, which also will make chips for game consoles. Details of the joint investment were not disclosed. The Oita plant is Toshiba's second announcement of a new fab, joining a 300mm fab line in Yokkaichi, Japan, that will make NAND flash and other advanced memory products. The construction plans will push up Toshiba's semiconductor-related capex 77% this year, to $958 million, according to Morgan Stanley, while Sony's semiconductor investment will increase 21%, to $875 million. Matsushita Electric Industrial Co. Ltd. is riding the strong consumer electronics market by increasing its chip capex 27%, to $625 million, Morgan Stanley said. "Matsushita now has a clear semiconductor strategy to concentrate on chips for internal use, as well as selling strategic SoCs to the commercial market," said Yoshihiro Shimada, an analyst at ING Japan. Japan's newest joint venture, Renesas Technology Corp., which was created through the union of the semiconductor operations of Hitachi Ltd. and Mitsubishi Electric Corp., will also make a strong showing. Renesas set a capex target of $750 million, which is nearly two times what Hitachi and Mitsubishi, combined, spent last year. A Renesas spokeswoman said $208 million will be used to upgrade and expand the company's 300mm-wafer foundry, Tricenti Technology Inc., in Naka, Japan. The remaining capex will be used to upgrade many of the other 10 fabs that Renesas operates. Elpida Memory Inc., the DRAM joint venture of Hitachi and NEC Corp., is expected to hold its capital spending flat this year, at $375 million. A spokeswoman said Elpida is expanding capacity at its 300mm fab in Hiroshima, which started production in January at a level of 4,000 wafers a month and is expected to ramp up to 15,000 wafers a month by the end of the year. NEC also plans to keep capex this year flat with 2002, at $616 million, a spokesman said.